Rand Paul: McCain ‘past his prime,’ maybe ‘unhinged’

Pence: Time For Allies To Pay Fair Share For NATO

Other NATO members need to pay their fair share?

Trump complains at NATO countries for not paying defense share

Congressman Ron Paul, MD – We’ve Been NeoConned

Steve Bannon Lays Out His AMAZING Political Philosophy

Published on Nov 18, 2016

Speech by Stephen K. Bannon (Steve Bannon), Donald Trump’s senior strategic advisor and architect of his winning 2016 election. In this speech delivered to the Liberty Restoration Foundation, Bannon layed out the poliitical philosophy both he and Trump embrace, and which appealed to the American people in the election. It is conservative, perhaps explaining why the political liberal left has resorted to evidently incorrect allegations of antisemitism or racism to try to derail his appointment. Bannon was a Hollywood producer who invested in the Seinfeld comedy TV series, and later became the chair of the Brietbart News Service, expanding it into one of the leading news sources nationally, as an alternative to liberal media outlets that previously dominated US media. He joined the Trump campaign in June 2016, leading him to victory and the White House. Do you think that Bannon is racist, as the democrats have alleged?

Deficits, Debts and Unfunded Liabilities: The Consequences of Excessive Government Spending

Uploaded on May 10, 2010

Huge budget deficits and record levels of national debt are getting a lot of attention, but this video explains that unfunded liabilities for entitlement programs are Americas real red-ink challenge. More important, this CF&P mini-documentary reveals that deficits and debt are symptoms of the real problem of an excessive burden of government spending. http://www.freedomandprosperity.org

Michelle Lee, a fact checker with the Washington Post, just posted a long and, to my mind, highly political column. Her column, read carefully, undermines Presidential candidate Ben Carson’s absolutely correct claim, made in announcing his candidacy, that the true measure of U.S. fiscal debt is not the $13 trillion our government reports as its debt. Instead, our true debt is over $200 trillion. Obviously, most of this true debt has been kept off the books by our politicians.

In this column, I’m going to defend Dr. Carson’s statement. But I want to point out that I don’t know Dr. Carson. I have never spoken with him. And I don’t yet know enough about Dr. Carson’s positions to have a view about his overall suitability for President. I am, however, impressed that out of the gate he is talking about the right measure of our nation’s fiscal condition.

I spoke at length to Michelle Lee prior to her writing her column. She told me she was a fact checker. But when fact checking turns into disguised political commentary, there’s a problem. Fact checkers are supposed to check the facts with experts. When it comes to economics, the experts are PhD economists, not political organizations or people, without real economics training, parading as economists, both of which she quotes in undermining Dr. Carson’s credibility.

Now let me turn to the substance. In referring to $211 trillion in unfunded mandates, Dr. Carson was referencing my calculation of the U.S. fiscal gap. As I explained in a NY Times op ed, the U.S. fiscal gap is $210 trillion. So Dr. Carson was off by $1 trillion – by less than one half of one percent.

The fiscal gap is the present value of all projected future expenditures less the present value of all projected future taxes. The fiscal gap is calculated over the infinite horizon. But since future expenditures and taxes far off in the future are being discounted, their contribution to the fiscal gap is smaller the farther out one goes. The $210 trillion figure is based on the Congressional Budget Office’s July 2014 Alternative Fiscal Scenario projections, which I extended beyond their 75-year horizon.

Dr. Carson referenced $211 trillion as the size of “unfunded mandates.” Michelle Lee correctly points out that Dr. Carson was referencing the U.S. fiscal gap, not the present value of mandatory spending. What she knew (because I told her), but failed to say, is that the present value of mandatory spending is far larger than $210 trillion because the fiscal gap is a net, not a gross number.

Michelle Lee is not a PhD economist. Nor is Bruce Barlett, whose truly absurd statement about the debt being an asset she quotes. Yes, it’s an asset, but it’s an asset that young and future generations must pay off. Social Security benefits are also an asset to their recipients, but again, they must be paid off by people who aren’t getting the benefits.

Michelle Lee apparently takes Bruce Bartell’s views more seriously than the views of 17 Nobel Laureates in economics and over 1200 PhD economists from MIT, Harvard, Stanford, Chicago, Berkeley, Yale, Columbia, Penn, and lesser known universities and colleges around the country. Each of these economists has endorsed The Inform Act, a bi-partisan bill that requires the CBO, GAO, and OMB to do infinite horizon fiscal gap accounting on a routine and ongoing basis.

Introductory Notes

In keeping with the practice of the Congressional Budget Office and other federal agencies that deal with budget policy, many of the federal debt, spending, and revenue figures in this research are expressed as a portion of gross domestic product (GDP). This is because debates about the size of government and the effects of its debt are frequently centered upon how much of a nation’s economy is consumed by government. This measure also accounts for population growth, some of the effects of inflation, and the relative capacity of government to service its debt.

However, the federal government does not have the entire U.S. economy at its disposal to service federal debt. The private sector, which produces the goods and services that comprise most of the economy, utilizes some of these resources, and local and state governments also consume some of the nation’s GDP. Hence, this research sometimes expresses federal debt as a portion of annual federal revenues. This is a more direct measure of the federal government’s capacity to service its debt.

In keeping with Just Facts’ Standards of Credibility, all graphs in this research show the full range of available data, and all facts are cited based upon availability and relevance, not to slant results by singling out specific years that are different from others.

Click here for a video that summarizes some of the key facts in this research.

Quantifying the National Debt

* As of March 1, 2017, the official debt of the United States government is $19.9 trillion ($19,920,418,771,289).[1] This amounts to:

* Publicly traded companies are legally required to account for “explicit” and “implicit” future obligations such as employee pensions and retirement benefits.[7][8][9] The federal budget, which is the “government’s primary financial planning and control tool,” is not bound by this rule.[10][11]

* At the close of the federal government’s 2016 fiscal year (September 30, 2016), the federal government had roughly:

$8.5 trillion ($8,542,000,000,000) in liabilities that are not accounted for in the publicly held national debt, such as federal employee retirement benefits, accounts payable, and environmental/disposal liabilities.[12]

$29.0 trillion ($29,038,000,000,000) in obligations for current Social Security participants above and beyond projected revenues from their payroll and benefit taxes, certain transfers from the general fund of the U.S. Treasury, and assets of the Social Security trust fund.[13][14]

$32.9 trillion ($32,900,000,000,000) in obligations for current Medicare participants above and beyond projected revenues from their payroll taxes, benefit taxes, premium payments, and assets of the Medicare trust fund.[15][16]

* The figures above are determined in a manner that approximates how publicly traded companies are required to calculate their liabilities and obligations.[17][18][19] The obligations for Social Security and Medicare represent how much money must be immediately placed in interest-bearing investments to cover the projected shortfalls between dedicated revenues and expenditures for all current participants in these programs (both taxpayers and beneficiaries).[20][21][22]

* Combining the figures above with the national debt and subtracting the value of federal assets, the federal government had about $84.3 trillion ($84,306,000,000,000) in debts, liabilities, and unfunded obligations at the close of its 2016 fiscal year.[23]

* This $84.3 trillion shortfall is 93% of the combined net worth of all U.S. households and nonprofit organizations, including all assets in savings, real estate, corporate stocks, private businesses, and consumer durable goods such as automobiles and furniture.[24][25]

* These figures do not account for the future costs implied by any current policies except those of the Social Security and Medicare programs.[30]

* These figures are based upon current federal law and “a wide range of complex assumptions” made by federal agencies.[31] Regarding this:

The Board of Social Security Trustees has stated that “significant uncertainty” surrounds the “best estimates” of future circumstances.”[32]

The Board of Medicare Trustees has stated that the program’s financial projections “are highly uncertain, especially when looking out more than several decades.”

The Board of Medicare Trustees has stated that the program’s long-term costs may be “substantially higher” than projected under current law. This is because current law includes the effects of the Affordable Care Act, which will cut Medicare prices for “many” healthcare services to “less than half of their level” under prior law. Per the Trustees:

Absent an unprecedented change in health care delivery systems and payment mechanisms, the prices paid by Medicare for health services will fall increasingly short of the costs of providing these services. … Before such an outcome would occur, lawmakers would likely intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result.[33]

Causes of the National Debt

Spending and Taxes

† To measure the entirety of government expenditures and receipts, “total” instead of “current” figures are preferable, but such data (shown in the next graph) only extends back to 1960.[34]

Spending Distribution

† Social programs include income security, healthcare, education, housing, and recreation.

‡ National defense includes military spending and veterans’ benefits.

§ General government and debt service includes the executive & legislative branches, tax collection, financial management, and interest payments.

# Economic affairs includes transportation, general economic & labor affairs, agriculture, natural resources, energy, and space. (This excludes spending for infrastructure projects such as new highways, which is not accounted for in this graph.[38])

£ Public order and safety includes police, fire, law courts, prisons, and immigration enforcement.

increased “probability of a fiscal crisis in which investors would lose confidence in the government’s ability to manage its budget, and the government would be forced to pay much more to borrow money.”[50][51]

* In 2012, the Journal of Economic Perspectives published a paper about the economic consequences of government debt. Using 2,000+ data points on national debt and economic growth in 20 advanced economies (such as the United States, France, and Japan) from 1800–2009, the authors found that countries with national debts above 90% of GDP averaged 34% less real annual economic growth than when their debts were below 90% of GDP.[52]

* The United States exceeded a debt/GDP level of 90% in the second quarter of 2010.[53]

* Per the textbook Microeconomics for Today:

GDP per capita provides a general index of a country’s standard of living. Countries with low GDP per capita and slow growth in GDP per capita are less able to satisfy basic needs for food, shelter, clothing, education, and health.[54]

* In 2013, the Political Economy Research Institute at the University of Massachusetts, Amherst, published a working paper about the economic consequences of government debt. Using data on national debt and economic growth in 20 advanced economies from 1946-2009, the authors found that countries with national debts over 90% of GDP averaged:

31% less real annual economic growth than countries with debts from 60% to 90% of GDP,

29% less real annual economic growth than countries with debts from 30% to 60% of GDP,

and 48% less real annual economic growth than countries with debts from 0% to 30% of GDP.[55]

* The authors of the above-cited papers have engaged in a heated dispute about the results of their respective papers and the effects of government debt on economic growth. Facts about these issues can be found in the Just Facts Daily article, “Do large national debts harm economies?”

Politics

Responsibility

* The U.S. Constitution vests Congress with the powers to tax, spend, and pay the debts of the federal government. Legislation to carry out these functions must either be:

passed by majorities in both houses of Congress and approved by the President; or

passed by majorities in both houses of Congress, vetoed by the President, and then passed by two-thirds of both houses of Congress; or

passed by majorities in both houses of Congress and left unaddressed by the President for ten days.[56]

* Other factors impacting the national debt include but are not limited to legislation passed by previous congresses and presidents,[57] economic cycles, terrorist attacks, natural disasters, demographics, and the actions of U.S. citizens and foreign governments.[58]

Current Policies

* In 2014, the Congressional Budget Office (CBO) projected the debt that the U.S. government would accumulate under current federal policies.[59] The projection used the following assumptions:

Unemployment will incrementally decline from 6.8% in 2014 to 5.8% in 2018 and 5.3% in 2027, where it will remain thereafter.[60] (For reference, the average of the previous 40 years is 6.5%.[61])

GDP growth will incrementally decline from an average rate of 3.4% above the rate of inflation in 2015 to 1.9% in 2021 and remain constant thereafter.[62] (The average of the previous 40 years is 2.9%.[63])

Federal revenues (i.e., taxes) will incrementally increase from 17.4% of GDP in 2014 to 18.0% in 2024 and remain constant thereafter.[64] (The average of the previous 40 years is 17.4%.[65])

Federal spending will incrementally increase from 20.4% of GDP in 2014 to 23.6% in 2025 and 31.8% in 2040.[66] (The average of the previous 40 years is 20.5%.[67])

Payments for Medicare services will undergo scheduled reductions that would likely cause “severe problems with beneficiary access to care.”[68][69]

* Combining these projections with historical data yields the following results:

† To measure the entirety of the national debt, it would be preferable to show “gross” debt instead of “publicly held” debt, but this data is not presented in this report. Nonetheless, it would make little difference because the excluded debt primarily resides in federal government trust funds that dwindle and become insolvent during the projection period.[71] Facts regarding why and how the federal government keeps its books in this manner are covered in the section of this research entitled “Government Accounting.”

punish younger generations of Americans, because most of the burden would fall on them.

reward older generations of Americans, because “they would partly or entirely avoid the policy changes needed to stabilize the debt.”

“substantially increase the size of the policy adjustments needed to put the budget on a sustainable course.”[73][74]

* The following Ph.D. economists and political scientists have claimed that the level of national debt during World War II is a good reason to not be overly concerned about the modern national debt:

Paul Davidson, editor of the Journal of Post Keynesian Economics and author of The Keynes Solution: The Path to Global Economic Prosperity:[75]

Rather than bankrupting the nation, this large growth in the national debt [during World War II] promoted a prosperous economy. By 1946, the average American household was living much better economically than in the prewar days. Moreover, the children of that Depression–World War II generation were not burdened by having to pay off what then was considered a huge national debt. Instead, for the next quarter century, the economy continued on a path of unprecedented economic growth and prosperity….[76]

Conservatives are also wrong when they argue that deficit spending and a large national debt will inevitably undermine economic growth. To see why, we need to simply look back at times when we have run up large deficits and increased the national debt. The best example is World War II when the national debt soared to 120% of GDP—nearly twice the size of today’s debt. This spending not only got us out of the Great Depression but set the stage for a prolonged period of sustained economic growth in the 50s and 60s.[78]

Right now, federal debt is about 50% of GDP. So even if we do run these deficits, federal debt as a share of GDP will be substantially less than it was at the end of World War II.

Again, the debt outlook is bad. But we’re not looking at something inconceivable, impossible to deal with; we’re looking at debt levels that a number of advanced countries, the U.S. included, have had in the past, and dealt with.[80]

* In the 40 years that followed the end of World War II (1946–1985):

federal spending as a percent of GDP averaged 42% lower than the last year of the war.[81]

publicly held debt as a percent of GDP decreased by 72 percentage points.[82]

* In 2010, around the time when the statements above were written, the Congressional Budget Office projected that under current policy and a sustained economic recovery over the next 40 years:

federal spending as a percent of GDP will average over 78% higher than in the four decades that followed World War II.[83]

publicly held debt as a percent of GDP will rise by 277 percentage points.[84]

Alternative Policies

* As alternatives to the CBO’s current policy projections detailed above, the CBO also ran projections for scenarios such as these:

Federal revenues will incrementally increase from 17.6% of GDP in 2014 to 18.0% in 2020, 19.9% in 2044, and 23.5% in 2084.[86][87] At this point, federal revenues (i.e., taxes) will be 35% higher than the average of the previous 40 years.[88]

Federal spending on all government functions will incrementally increase from 20.4% of GDP in 2014 to 21.5% in 2020, and 26.0% in 2040.[89] At this point, spending will be 27% higher than the average of the previous 40 years.[90]

Payments for Medicare services will undergo reductions that will likely cause “severe problems with beneficiary access to care.”[91][92]

Starting in 2024, Medicare beneficiaries will have a choice to enroll in private plans paid for by Medicare or remain in the traditional Medicare program.[94] Also starting in 2024, the eligibility age for Medicare benefits will incrementally rise to correspond with Social Security’s retirement age.[95] Compared to the projections under the current policy scenario, Medicare spending will be 0.5% lower in 2016, 2% lower in 2020, and 4% lower in 2024.[96]

Federal Medicaid spending will be converted to an “allotment that each state could tailor to meet its needs, indexed for inflation and population growth.”[97] The expansion of Medicaid manadated by the Affordable Care Act (a.k.a. Obamacare) will be repealed.[98] Compared to the projections under the current policy scenario, Medicaid spending will be 9% lower in 2016, 19% lower in 2020, and 24% lower in 2024.[99]

All federal spending related to Obamacare’s exchange subsidies will be repealed.[100]

Spending on all government functions except for interest payments on the national debt will incrementally decline from 18.9% of GDP in 2015 to 16% in 2025 before increasing to 16.4% in 2035.[101] (The average of the previous 40 years is 18.3%).[102]

Revenues will increase from 18.2% of GDP in 2015 to 18.4% in 2025, 19% in 2032 and stay constant thereafter.[103] (The average of the previous 40 years is 17.4%.[104])

* Combining historical data on the national debt with CBO’s projections for current policy, current law, and the Ryan plan yields the following results:

Public Opinion

* A poll conducted by NBC News and the Wall Street Journal in February 2011 found that:

80% of Americans are concerned “a great deal” or “quite a bit” about federal budget deficits and the national debt.

if the deficit cannot be eliminated by cutting wasteful spending, 35% of Americans prefer to cut important programs while 33% prefer to raise taxes.

22% think cuts in Social Security spending will be needed to “significantly reduce the federal budget deficit,” 49% do not, and 29% have no opinion or are not sure.

18% think cuts in Medicare spending will be needed to “significantly reduce the federal budget deficit,” 54% do not, and 28% have no opinion or are not sure.[107]

* Other than interest on the national debt, most of the long-term growth in federal spending (as a percent of GDP) under the CBO’s current policy and current law scenarios stems from Social Security, Medicare, Medicaid, the Children’s Health Insurance Program, and Affordable Care Act (a.k.a. Obamacare) subsidies.[108]

* A poll conducted in November 2010 by the Associated Press and CNBC found that:

85% of Americans are worried that the national debt “will harm future generations.”

56% think “the shortfalls will spark a major economic crisis in the coming decade.”

when asked to choose between two options to balance the budget, 59% prefer to cut unspecified government services, while 30% prefer to raise unspecified taxes.[109]

* A poll conducted in July 2005 by the Associated Press and Ipsos found that:

Congresses

* During the first session of the 113th Congress (January–December 2013), U.S. Representatives and Senators introduced 168 bills that would have reduced spending and 828 bills that would have raised spending.[111]

* The table below quantifies the costs and savings of these bills by political party. This data is provided by the National Taxpayers Union Foundation:

Presidents

* In February 2001, Republican President George W. Bush stated:

Many of you have talked about the need to pay down our national debt. I listened, and I agree. We owe it to our children and grandchildren to act now, and I hope you will join me to pay down $2 trillion in debt during the next 10 years. At the end of those 10 years, we will have paid down all the debt that is available to retire. That is more debt, repaid more quickly than has ever been repaid by any nation at any time in history.[115]

* From the time that Congress enacted Bush’s first major economic proposal (June 7, 2001[116]) until the time that he left office (January 20, 2009), the national debt rose from 53% of GDP to 74%, or an average of 2.7 percentage points per year.[117]

* During eight years in office, President Bush vetoed 12 bills, four of which were overridden by Congress and thus enacted without his approval.[118] These bills were projected by the Congressional Budget Office to increase the deficit by $26 billion during 2008–2022.[119]

* In February 2009, Democratic President Barack Obama stated:

I refuse to leave our children with a debt that they cannot repay—and that means taking responsibility right now, in this administration, for getting our spending under control.[120]

* From the time that Congress enacted Obama’s first major economic proposal (February 17, 2009[121]) until September 30, 2016, the national debt rose from 74% of GDP to 105%, or an average of 4.0 percentage points per year.[122]

* As of November 4, 2016, President Obama has vetoed twelve bills, one of which has been overridden by Congress and thus enacted without his approval.[123] This bill is projected by the Congressional Budget Office to “have no significant effect on the federal budget.”[124]

Government Accounting

Trust Funds and the Two Main Categories of Debt

* Some federal programs (such as Social Security) have “trust funds” that are legally separated from the rest of the federal government.[125]

* When these programs spend less than the federal government allocates to them, their surpluses are loaned to the federal government. This creates a legal obligation for the federal government to pay money and interest to these programs, thus adding to the national debt.[126][127][128][129][130]

* The federal government divides the national debt into two main categories:[131][132]

Money that it owes to federal entities such as the Social Security program.

Money that it owes to non-federal entities such as individuals, corporations, local governments, and foreign governments.[133] Also, money owed to the Federal Reserve is classified under this category, even though the Federal Reserve is a federal entity.[134][135]

NOTE: Just Facts has identified numerous instances in which politicians and journalists have used terms that technically refer to the overall national debt, when in fact, they are only referring to a portion of it. In order to clear up some of the confusion this has created, below are common terms for the national debt categorized by their proper meanings:

* The federal law that governs the repayment of the national debt draws no distinction between the debt owed to federal and non-federal entities. Both must be repaid with interest.[143]

* The White House Office,[144][145] Congressional Budget Office,[146] and other federal agencies[147] sometimes exclude the debt owed to federal entities in their reckonings of the national debt because this portion of the debt “represents internal transactions of the government and thus has no effect on credit markets.”

* Federal programs to which this money is owed, such as Social Security and Medicare, include this money and the interest it generates in their assets and financial projections.[148][149][150]

* In the 2000 presidential race, the Gore-Liebermann campaign released a 192-page economic plan that contains over 150 uses of the word “debt.” In none of these instances does the plan mention or account for any of the debt owed to federal entities.[151] The same plan includes the debt owed to federal entities in the assets of the Social Security and Medicare programs.[152]

“Deficits” and “Surpluses”

* During the federal government’s 2010 fiscal year (October 1, 2009 to September 30, 2010[153]), the national debt rose from $12.0 trillion to $13.6 trillion, thus increasing by $1.6 trillion.[154]

* The White House,[155]USA Today,[156] Reuters,[157] and other government and media entities reported that the 2010 federal “deficit” was $1.3 trillion.

* The difference between the national debt increase of $1.6 trillion and the reported deficit of $1.3 trillion is attributable to the following accounting practices:

When calculating the reported deficit, the federal government merges the finances of all federal programs into what is called the “unified budget.” Hence, the deficit does not account for the intergovernmental debt that arises when programs such as Social Security loan their surpluses to the federal government.[158]

When the federal government lays out money for programs such as TARP and student loans, the outgo is not fully counted in the deficit. The deficit reflects only what the government expects to lose or gain on these loans.[159][160]

* PolitiFact, a Pulitzer Prize-winning project of the Tampa Bay Times to “help you find the truth in politics,”[161] has stated that there were “several years of budget surpluses” during Bill Clinton’s presidency. This same article cites the rise in “national debt” during the tenure of George W. Bush.[162]

* Using the same criterion PolitiFact applied to Bush’s presidency (change in gross national debt), the national debt rose every year of Clinton’s presidency:

Year

National Debt on Inauguration Date†

(billions)

1993

$4,188

1994

$4,501

1995

$4,797

1996

$4,988

1997

$5,310

1998

$5,496

1999

$5,624

2000

$5,706

2001

$5,728

† NOTE: PolitiFact used the inauguration date for its debt baseline.

The national debt also rose every fiscal year of Clinton’s presidency.

Debt Owed to Foreign Entities

* Per the White House Office of Management and Budget (2016):

During most of American history, the Federal debt was held almost entirely by individuals and institutions within the United States. In the late 1960s, foreign holdings were just over $10 billion, less than 5 percent of the total Federal debt held by the public. Foreign holdings began to grow significantly starting in the 1970s and now represent almost half of outstanding [publicly held] debt.[168]

* Ownership of U.S. government debt by foreign creditors as of August 31, 2016:

* Foreign purchases of U.S. government debt increase the demand for this debt, thus putting downward pressure on U.S. interest rates. Conversely, foreign sales of U.S. government debt place upward pressure on U.S. interest rates.[170][171]

* Per a 2008 Congressional Research Service report, a “potentially serious short-term problem would emerge if China decided to suddenly” sell its holding of U.S. government debt. Possible effects could include:

“a more general financial reaction (or panic), in which all foreigners responded by reducing their holdings of U.S. assets”;

The likelihood that China would suddenly reduce its holdings of U.S. securities is questionable because it is unlikely that doing so would be in China’s economic interests. First, a large sell-off of China’s U.S. holdings could diminish the value of these securities in international markets…. Second, such a move would diminish U.S. demand for Chinese imports…. A sharp reduction of U.S. imports from China could have a significant impact on China’s economy….[173]

* During a visit to China in February 2009, Secretary of State Hillary Clinton said:

By continuing to support American Treasury instruments [i.e., buy U.S. government debt] the Chinese are recognizing our interconnection. … We have to incur more debt. It would not be in China’s interest if we were unable to get our economy moving again. … The U.S. needs the investment in Treasury bonds to shore up its economy to continue to buy Chinese products.[174]

* In August 2007 during a currency dispute between the U.S. and China, two leading officials of Chinese Communist Party bodies suggested that China use the threat of selling U.S. debt as a “bargaining chip.”[175]

* In February 2009 during a dispute over U.S. arms sales to Taiwan, a Chinese general made the following statements in the state-run magazine Outlook Weekly:

Our retaliation should not be restricted to merely military matters, and we should adopt a strategic package of counterpunches covering politics, military affairs, diplomacy and economics to treat both the symptoms and root cause of this disease. … [W]e could sanction them using economic means, such as dumping some U.S. government bonds.[176]

* One month later while appearing before China’s parliament, the head of China’s State Administration of Foreign Exchange said:

the U.S. Treasury market is important to us. … This is purely market-driven investment behavior. I would hope not to see this matter politicized.[177]

“Budget Deal to Cut $38 Billion Averts Shutdown”; “Republicans were able to force significant spending concessions from Democrats….” – New York Times[181]

* None of these articles reported that this figure of $38 billion in cuts was primarily relative to a portion of the budget called “discretionary non-emergency appropriations.”[182] Relative to the entire federal budget, this cut left a projected spending increase of $135 billion from 2010 to 2011. This equates to an inflation-adjusted increase of $49 billion or 0.1 percentage points of GDP:[183]

* None of the articles quoted above contains a budget-wide frame of reference for the cuts. A spending reduction of $38 billion equates to 1.0% of the estimated 2011 budget or 2.7% of the projected deficit:

Bush Tax Cuts

Now, please understand that the Bush tax cuts are the single largest part of the black hole that is the federal budget deficit.[186]

* In 2010, the Bush tax cuts lowered federal revenues by about $283 billion.[187][188] This was equivalent to 8% of the federal budget or 22% of the deficit.[189]

* Per the Congressional Budget Office (CBO), “Most parameters of the tax code are not indexed for real income growth, and some are not indexed for inflation.” Thus, if tax cuts are not periodically implemented, average federal tax rates “increase in the long run.”[190]

* In 2000, the year before the first Bush tax cuts were passed,[191] the federal government collected revenues equal to 20.4% of the nation’s gross domestic product (GDP), the highest level in the history of the United States.[192] Over the previous 30 years, federal revenues averaged 18.3% of GDP.[193]

* In 2000, the stock market “dot.com” bubble burst,[194] the NASDAQ lost 39% of its value,[195] and profits for nonfinancial corporations fell by 18%.[196] In the first quarter of 2001, the nation’s GDP contracted and a recession began.[197][198]

* In June 2001 and May 2003, Congress passed and President Bush signed laws that implemented various tax cuts.[199][200]

* After the Bush tax cuts were fully implemented, federal revenues were 17.8% of GDP in 2005, 18.5% in 2006, and 18.6% in 2007.[201] Average federal revenues for the 30 years preceding the Bush tax cuts were 18.4%.[202]

* The Great Recession began in December 2007,[203] and federal revenues declined to 17.7% of GDP in 2008.[204]

* In February 2009, Congress passed and President Obama signed a law that implemented various tax cuts.[205]

* Federal revenues declined to 15.7% of GDP in 2009 and 16.4% in 2010.[206]

* Federal spending rose from 21.0% of GDP in 2007 to 26.5% in 2010.[207] Average federal spending for the 30 years preceding the Great Recession was 21.8%.[208]

The “Do Nothing” Plan

* In April 2011, Ezra Klein of the Washington Post posted a graph of spending and revenue projections based upon CBO’s “current law” scenario and wrote that it:

shows what happens if we do … nothing. The answer, as you can see, is that the budget comes roughly into balance.[209]

* Klein’s graph and commentary omitted the interest and outcome of the national debt under this plan.[210] In the “do nothing” scenario, outlays were projected to exceed revenues every year through 2084, and the publicly held debt was projected to increase from 62% of GDP in 2010, to 74% in 2030, 90% in 2050, and 113% in 2084.[211]

* In the same commentary, Klein wrote that the “current law” scenario is “a pretty good plan” that contains:

a balanced mix of revenues, through returning tax rates to Clinton-era levels and implementing the taxes in the Affordable Care Act, and program cuts … in Medicare….[212]

* Under this scenario:

Certain elements of the tax code are not indexed for inflation or wage growth. Consequently, taxpayers are shifted over time into higher tax brackets.

According to the Congressional Budget Office, by 2020 revenues “reach higher levels relative to the size of the economy than ever recorded in the nation’s history.”

Revenues as a portion of GDP continue climbing through 2084, rising 69% higher than the average of the past 40 years and 47% higher than ever recorded in the history of the United States.[213][214]

As a portion of GDP, federal spending without interest on the national debt rises by 2084 to 68% higher than the average of the past 40 years.[215]

Context

* Without mentioning the role of Congress in taxes, spending, or the national debt,[216][217] PolitiFact (in the same article cited above) wrote that the national debt increased by $5.73 trillion “under” George W. Bush whereas there were budget surpluses “at the end of the Clinton administration.”[218]

* Below are the fluctuations in national debt organized by the tenures of recent presidents and congressional majorities:

* Other factors impacting the national debt include but are not limited to: legislation passed by previous congresses and presidents,[220] economic cycles, terrorist attacks, natural disasters, demographics, and the actions of U.S. citizens and foreign governments.[221]